Hospitals on the brink

Image courtesy of Nadav Soroker/Searchlight New Mexico

A court settlement revealed that a lobbying group opposing medical malpractice reform was funded by personal injury lawyers — but not before it helped kill legislation aimed at reducing costs for health care facilities. Now, looming federal changes could put rural providers out of business.

By Ed Williams
Courtesy of Searchlight NM

Over the past four years, a combination of financial challenges have put New Mexico’s rural hospitals on edge. Declining populations and low reimbursement rates for Medicaid and Medicare patients, who are over-represented in small towns, have made it difficult to cover costs. A nationwide shortage of doctors has hit rural hospitals especially hard, as more and more physicians opt to move to urban centers or to states with more attractive incentives for practitioners.

But one of the sharpest strains on hospitals’ budgets, providers say, is the soaring cost of medical malpractice insurance in New Mexico — costs that have risen dramatically year after year since 2021, when the state legislature raised the caps on malpractice liability from $600,000 to $6 million over a five-year period, among the highest in the country. Punitive damages, which have no limits in New Mexico, often drive payouts much higher.

The resulting surges in malpractice insurance costs have hit rural hospitals especially hard. Some — like Union County General Hospital in Clayton, where premiums have risen nearly 500 percent in the past four years — are at risk of closing entirely if costs continue to rise.

Tammie Chavez, CEO at Union County General Hospital in Clayton, has contended with a nearly 500 percent rise in malpractice insurance costs in recent years. The cost has threatened to close the hospital. Nadav Soroker/Searchlight New Mexico

In the most recent legislative session, lawmakers introduced a bill to address that problem by limiting attorney’s fees and punitive damages in malpractice cases. But that bill stalled in committee — thanks in part to the work of New Mexico Safety Over Profit, a group underwritten by personal injury law firms that lobbied aggressively against the legislation.

​In the months since the session ended, premiums have continued to rise for hospitals. And with potential cuts to Medicaid looming on the horizon after the passage of the One Big Beautiful Bill Act, many rural hospitals in New Mexico find themselves in the most perilous situation in recent memory.

Dark money, unmasked

A central player in the fight against reducing hospitals’ expenses by reforming the state’s malpractice law is a group called New Mexico Safety Over Profit. It emerged in October 2024, just months ahead of the 2025 legislative session, and launched a campaign to prevent efforts at reducing attorney’s fees and other changes to malpractice law.

​Safety Over Profit branded itself as a grassroots organization made up of “individuals and families harmed by big corporations, institutions and profit-driven systems.” It claimed that reducing punitive damages and payouts to lawyers would harm patients and make already laborious lawsuit processes even more difficult. The group also published and circulated its own study, which, among other things, questions the severity of the state’s doctor shortage and claims that hospitals’ malpractice costs have not increased in recent years. As reported by Searchlight in February, the study misrepresented much of the data and reports it drew from to support its conclusions.

The group continued to distribute the study in the legislature after a Searchlight investigationhighlighted its inaccuracies.
Throughout the session and beyond, Safety Over Profit refused to disclose names of its donors, telling Searchlight that it had to keep their identities secret in order to protect their safety and privacy, asserting that they could be targeted by “corporate interests.”

In June, the New Mexico State Ethics Commission filed suit against Safety Over Profit in civil court, charging that the group had violated the law by refusing to disclose the sources of its funding and failing to properly report political advertising expenditures during the legislative session.

Safety Over Profit’s Nov. 2024 report, which argues against reforming New Mexico’s malpractice law

Safety Over Profit settled that case this month, agreeing to pay the maximum fine of $5,000 and turning over a full list of its donors since 2021 — all of whom turned out to be trial lawyers or employees of law offices.
​
The disclosures show that nearly 20 percent of the $1.3 million in contributions made to Safety Over Profit came directly from the New Mexico Trial Lawyers Association. Nicholas Rowley, an Iowa-based personal injury attorney who last year garnered national headlines after winning a record-breaking $412 million verdict against an Albuquerque fertility clinic, donated $425,000 to Safety Over Profit, the records show.

Link to Signed Settlement Agreement.

Several of Safety Over Profit’s donors, including prominent attorneys such as Albuquerque-based lawyers Lisa Curtis and Cid Lopez, had vocally opposed proposed changes to the state’s malpractice law during the session, speaking against the measures on television and in newspapers. Singleton Schreiber, a personal injury firm where former state auditor Brian Colon serves as managing partner, donated $10,000.

​In the wake of the ethics commission settlement, Safety Over Profit posted a full list of its donors on its website and on social media. “We don’t hide our donors, we celebrate them,” the posts read. The group also noted that the settlement did not include an admission of wrongdoing. A spokesman for Safety Over Profit did not respond to Searchlight’s requests for an interview.

The Albuquerque office shared by Safety Over Profit secretary Damon Ely and executive director Jon Lipshutz. Nadav Soroker/Searchlight New Mexico

Proponents of malpractice reform celebrated the ethics commission settlement.

“Thanks to the New Mexico Ethics Commission and Searchlight New Mexico, the public now knows that this dark money group, calling itself Safety over Profit and posing as a group of regular New Mexicans who oppose medical malpractice reform, is entirely funded by trial lawyers, their law firms and is actually nothing more than a front group for the trial lawyers,” said Fred Nathan, executive director of Think New Mexico, a nonprofit think tank that helped craft the legislation to limit attorney’s fees and punitive damages.

​Safety Over Profit, meanwhile, asserted in a statement on August 11 that it would continue to fight against what it called “negligent corporations” that put patients at risk.

​An uncertain future

Hospitals, meanwhile, are watching their malpractice premiums continue to increase,  even as other financial risks grow.

Across, the board, rural hospitals saw their premiums rise an average of 134 percent from 2019-2024, according to data from the New Mexico Hospital Association. In some cases, that increase has been much higher.

Roosevelt General Hospital, a county-owned hospital in Portales, recently renewed its malpractice policy for a whopping $1.42 million — up from $330,000 in 2019. The hospital’s deductible increased from $25,000 to $100,000 in the same period.

“I’m paying hundreds of thousands more for my medical malpractice insurance that I could have used to hire more doctors and to give our staff raises, because our staff salary levels are not what they should be,” said Kaye Green, Roosevelt General’s CEO.

Meanwhile, Green said, a radiology group the hospital contracts with in Lubbock recently cancelled their agreement with her hospital, specifically pointing to New Mexico’s malpractice landscape as a reason for the move.

While premiums continue to rise, budget changes set to take place in 2028 as part of the One Big Beautiful Bill Act threaten to strain hospitals further.

For hospitals, one particularly concerning provision of that bill is a reduction in the amount of supplemental Medicaid payments states can make to health care providers. Many hospitals in New Mexico rely on those payments to offset their losses from caring for patients covered by Medicaid, which often reimburses hospitals at a rate lower than the actual cost of care.

Those payments could slash the amount the state can pay hospitals from $1.5 billion to $400 million, according to the New Mexico Hospital Association.

“Absent any other changes, we have six to eight of our hospitals that are at risk of closing within 12 to 24 months of the full impact of these federal changes,” said Troy Clark, President and CEO of the New Mexico Hospital Association. “Most of those are the sole community providers,” the only local option for care.

Specific details on the bill’s implementation remain hazy; hospitals and legislators could find ways to cushion the financial blow before it’s fully implemented. Health care providers are nonetheless on edge.

“It very well could be fatal for this hospital,” said Kaye Green. “I am worried. I’m very worried. But at the same time, I’m trying not to worry until I actually know what the numbers are going to look like.”

Martin Hickey, a medical doctor and Democratic state senator from Bernalillo County who introduced the bill to reduce attorney’s fees and punitive damages in the 2025 session, told Searchlight  that he would continue to introduce legislation to address the financial strain that malpractice insurance puts on New Mexico’s health care system.

​“The lawyers are basically setting up their own gravy train through the legislature” at the expense of patients and providers, Hickey said. “I will carry a bill again next year.”